MADRID, Nov 7 Spanish oil major Repsol
cut its 2013 production growth target on Thursday to reflect
outages in conflict-hit Libya, which it also blamed for a
decline in third-quarter profit.

Volumes in Libya, which account for 12 percent of Repsol's
total output, have dropped as social unrest in the resource-rich
country has escalated, also forcing Italian peer Eni to
cut its annual production outlook last week.

Repsol said growth was likely to be around 7 percent this
year, down from a previous forecast for 10 percent but in line
with a longer-term target for output to reach 500,000 barrels of
oil equivalent (BOE) per day in 2016.

"When we had the second-quarter results presentation I was
quite confident that the 10 percent increase was reachable, but
with disruptions in Libya it's difficult to say," Chief
Financial Officer Miguel Martinez said on an analyst call.

"If things develop normally, I'd say 7 percent, basically in
line with the long-term production goal."

After strong growth in the first half, Repsol's output rose
a mere 1.5 percent to 344,300 barrels of oil equivalent (BOE)
per day in the third quarter, with new start-ups in Bolivia,
Russia and Brazil barely making up for the declines in Libya.

This, combined with a 60 percent drop in refining margins,
hit quarterly profit, echoing the woes of European oil peers in
the third quarter.

Net profit adjusted for one-time items and changes in the
value of inventories fell an annual 22 percent to 388 million
euros ($525 million), in line with a Reuters poll forecast.

DIFFERENT PATH

Other European integrated oil majors last week promised to
control spending and return cash to investors through asset
sales, share buybacks or dividends.

But the Spanish company is on a different path, having
already been forced to take measures to shore up its finances
and keep shareholders happy after the nationalisation of its
Argentine unit YPF last year.

Shares have risen by a third over the past year, nearly
doubling from a 10.56 euro low hit in the months following the
YPF loss, boosted by the $6.7 billion sale of liquefied natural
gas assets and a 3 billion-euro preference share buy back plan.

Following the LNG sale, Repsol was in talks to sell its 30
percent stake in Gas Natural Fenosa to raise funds for
further investments in exploration and production, but CFO
Martinez said any sale was on hold until a clear investment
alternative emerges.

In a bid to diversify away from high-risk countries like
Libya, Repsol had been eyeing opportunities in North America,
but the lack of an imminent buy option has combined with waning
interest in Gas Natural to put the breaks on the sale, sources
said last month.

Shares in Repsol, which is still seeking compensation for
YPF, trade at a 22 percent premium to its integrated oil and gas
peers when measured on a forward earnings multiple, based on
Thomson Reuters data.

By 1415 GMT its shares were down 1.3 percent at 19.51 euros.
($1 = 0.7392 euros)
(Editing by Julien Toyer, David Holmes and David Evans)

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